WAC 175

Tax on Retailers

Retail Sales Tax Imposed

Exemptions -- Sales of personal property for use connected with private or common carriers in interstate or foreign commerce.

Exemptions -- Sales of airplanes, locomotives, railroad cars, or watercraft for use in interstate or foreign commerce or outside the territorial waters of the state or airplanes sold to United States government -- Components thereof and of motor vehicles or trailers used for constructing, repairing, cleaning, etc. -- Labor and services for constructing, repairing, cleaning, etc.

Sales and Use Taxes Authorized - Additional Taxes Authorized - Maximum Rates

Persons engaged in the business of operating as a private or common carrier by air, rail or water in interstate or foreign commerce.

"UTILITY BOXES" USED TO SHIP CARGO IN INTERSTATE COMMERCE Revised 2/2/09 See ETA 3026.2009

PURCHASE AND INSTALLATION OF FIXTURES AND EQUIPMENT ON A VESSEL OWNED BY ANOTHER Revised 2/2/09 See ETA 3027.2009

Utility boxes" used to ship cargo in interstate commerce

Purchase and installation of fixtures and equipment on a vessel owned by another

Taxability of air transportation and other activities performed with aircraft

Claims of Constitutional Impairment of Contract made under Initiative 1183

"New Buyers" Retail Sales Tax Exemption Certificate

Questions and Answers on Spirits Tax for Retailers

Taxability of the Charter Boat Industry

Taxability of the Charter Boat Industry

USE TAX--WATERCRAFT USED IN INTERSTATE COMMERCE. Vessels used to haul or tow other vessels laden with goods moving in interstate commerce are included within the scope of statutory use tax exemption.

USE TAX -- TANGIBLE PERSONAL PROPERTY -- INTERSTATE COMMERCE -- PROMOTIONAL BROCHURES. Sales brochures constitute tangible personal property. If used in connection with operating as a carrier in interstate and foreign commerce, their purchase and delivery here is tax exempt under RCW 82.08.0261. The proviso in the statutory exemption of RCW 82.08.0261 which makes interstate carrier property taxable under use tax when it is put to actual use here, means that the use tax applies if the property is used here for its ultimate intended purpose.

SALES TAX -- EXEMPTION CERTIFICATES. Vendor required to obtain exemption certificates for chemicals and cleaning supplies sold to common carriers. Chemicals consumed in cleaning do not qualify as component parts.

SALES/USE TAX -- SALES TO COMMON CARRIERS -- NECESSITY TO COLLECT. The provision in Rule 175 that allows vendors to take an exemption certificate from a common carrier for retail sales does not apply to the altering or repairing of real property. The contractor must collect retail sales tax on such work. NOTE: THIS DETERMINATION OVERRULES A PORTION OF DET. NO. 91-313, 12 WTD ___ (1993).

RETAIL SALES TAX -- LEASED RAILROAD CARS -- REPAIR CHARGES. Railroad car repair charges were exempt from retail sales tax under RCW 82.08.0262, where the railroad leased the rail cars and used them to transport property for hire primarily in interstate commerce.

RETAIL SALES TAX EXEMPTION -- USE TAX EXEMPTION -- [VESSEL] -- THEREWITH -- STATUTORY CONSTRUCTION -- INTERSTATE AND FOREIGN COMMERCE -- WATERCRAFT.

[VESSEL] -- STAND BY -- ESCORT SERVICES. [Vessels] which do not physically connect to other exempt cargo-laden watercraft for the purpose of towing or hauling the other exempt watercraft is not "transporting property therein or therewith."

[VESSELS]. [ Vessels] must be used as an inseparable part of a continuing interstate or foreign movement of property for hire to be exempt from retail sales tax and use tax.

BOUNDARY CROSSING -- TERRITORIAL WATERS -- WATERCRAFT EXEMPTIONS. The legislature did not include a boundary crossing requirement for watercraft in the language of the statutory exemptions, therefore taxpayer's [vessels] which tow or haul other exempt vessels exclusively within Washington territorial waters are not required to cross international or interstate boundaries as a condition for determining whether taxpayer's [vessels] are entitled to the sales and use tax exemptions.

PRIMARY USE -- TRANSPORTING FOR HIRE. Primary use must constitute 51% or more usage of each [vessel] in conducting interstate or foreign commerce by transporting property or persons therein or therewith for hire.

CARGO -- STATUTORY CONSTRUCTION. Use of the term "cargo" instead of "property" does not violate rules of statutory construction. Cargo refers to the property being transported by the exempt vessel/watercraft being towed. Statutory exemptions must be narrowly construed. United Parcel Service v. Department of Revenue, 102 Wn.2d 355, 360 (1984).

USE TAX -- EXEMPTIONS -- PRIMARY USE -- AIRCRAFT -- INTERSTATE COMMERCE. Aircraft primarily used by a private carrier to conduct interstate commerce by transporting property therein for hire are exempt from use tax.

RETAIL SALES TAX -- USE TAX -- AIRCRAFT PURCHASED FOR LEASE -- FLIGHT INSTRUCTION: In general, aircraft purchased by a taxpayer for providing flight instruction services are subject to use tax. However, a different result may occur where a taxpayer separately charges student pilots retail sales tax for lease of aircraft pursuant to lease agreements under which the student pilots assume possession and control of the aircraft. Under such circumstances, the aircraft was purchased for resale, and it is not subject to use tax so long as the aircraft is not put to intervening, non-exempt use.

HAZARDOUS SUBSTANCE TAX; PETROLEUM PRODUCTS TAX; B&O TAX -- EXEMPTION/CREDIT -- FUEL-IN-TANKS -- MARINE LUBRICANTS. Marine lubricants are considered to be a fuel for purposes of a tax credit/exemption, only where they are concurrently consumed in the bunker fuel's combustion process.

RETAIL SALES TAX AND USE TAX -- WATERCRAFT EXEMPTIONS -- DELIVERING BUNKER FUEL -- TRANSPORTING THEREIN OR THEREWITH -- INTERSTATE OR FOREIGN COMMERCE. Delivering marine bunker fuel, for consumption, to other vessels carrying and moving cargo in interstate or foreign commerce, does not constitute transporting the cargo that is aboard the other vessels. It is not a use that qualifies for the exemptions in RCW 82.08.0262 and RCW 82.12.0254.

PUBLIC UTILITY TAX -- DEDUCTIONS -- EXPORTS -- COMMODITIES -- FORWARD -- FOREIGN DESTINATIONS. Revenue from transportation of bunker fuel, for consumption, to ship side on Washington tidewater or navigable tributaries, is not deductible under RCW 82.16.050(8). There is no forwarding of commodities to interstate or foreign destinations required by the statute.

RETAIL SALES TAX AND USE TAX -- WATERCRAFT EXEMPTIONS -- DELIVERING BUNKER FUEL -- TRANSPORTING THEREIN OR THEREWITH -- INTERSTATE OR FOREIGN COMMERCE. The fact that ocean-going vessels to which Taxpayers watercraft deliver bunker fuel cannot consume the fuel until they are in international waters, does not bring Taxpayers instate transportation of the bunker fuel within the exemptions in RCW 82.08.0262 and RCW 82.12.0254.

USE TAX EXEMPTION -- WATERCRAFT USED PRIMARILY IN INTERSTATE OR FOREIGN COMMERCE. The referenced use tax exemption for watercraft applies only to persons conducting or engaged in business as a private or common carrier by watercraft primarily used in interstate or foreign commerce to carry passengers or property for hire. It does not apply to a shipper that hires a towing company to tow log booms.

USE TAX -- EXEMPTION -- WATERCRAFT COMPONENT PART -- INTERSTATE COMMERCE. There is a sales/use tax exemption on the use of personalty which becomes a component part of watercraft used in conducting interstate or foreign commerce by transporting therein or therewith property and persons for hire. The exemption was not available to the taxpayer because its yacht was not used in interstate commerce to transport for hire.

USE TAX -- EXEMPT USAGE -- WATERCRAFT --INTERSTATE COMMERCE. To qualify for the statutory exemption for a watercraft used in interstate commerce, a boat must be used primarily to carry persons or property for hire. Use of a boat for employee accommodations does not qualify. Weyerhaeuser v. Dept. of Revenue, 106 Wn.2d 557 (1986). 1 WTD 415 (1986).